The economy is booming. So why is California’s unemployment rate so high?

California keeps struggling with unemployment far more than the rest of the nation.

Week after week, the numbers tell the same story. Last week, the state had about 22% of the nation’s new unemployment claims, even though it has 11.7% of the country’s workforce, the Labor Department reported Thursday. Throughout November, the percentages were roughly the same.

In October, the state was tied with Nevada for having the highest unemployment rate in the nation, at 7.3%, well above the national figure of 4.6%..

There’s no single easy explanation.

Among the contributors to the trend:

▪ California is more dependent on tourism than other states, and the industry has been hit hard by the pandemic and is yet to fully recover.

▪ Workers are not coming back, especially to many low-wage industries like hospitality and retail. Some employees who had worked through the pandemic are quitting.

▪ Job openings are not matching the skill sets of unemployed workers.

“All of the information is anecdotal,” said Michael Bernick, an employment attorney with Duane Morris LLP and former director of the Employment Development Department, “but the feedback has been consistent from employers that workers are not coming back to former jobs in restaurants, hospitality and retail, and that employers are having difficulty attracting new workers.”

What does this mean to the job outlook in the state? We try to look ahead.

Will unemployment numbers drop?

Q. Newsom has said the state has gained back more jobs than any other states. Yet, the state has the highest unemployment rate. How come?

A. California simply lost a lot of jobs during the pandemic. Between February and May 2020, the state lost more than 3 million jobs.

The state has gained back more than 2 million jobs, but it’s still more than 900,000 short of where it was in February 2020. The pandemic has been the worst recession for jobs in California since the Great Depression, said Somjita Mitra, the chief of economic research at the California Department of Finance, during a recent Milken Institute and Cal Matters event.

Q. How is the leisure and hospitality industry doing?

A. It’s coming back. The latest state jobs unemployment data, compiled the week ending Oct. 12, showed that those industries employed 1.7 million people at the time, up 306,000 from a year earlier. That was by far the biggest gain of any employment sector; the next was professional business services, which added 165,000 people for a total of 2.7 million.

Still, the hospitality industry has 17% fewer employees than before the pandemic.

“Much of the ups and downs are coming from Southern California where tourism and services are disproportionately high,” said Sung Won Sohn, president of SS Economics, an economic consulting firm in Los Angeles.

California’s economy and jobs

Q. There are a lot of job openings in California, so why aren’t people filling them?

A. The state had more than 1.15 million job openings in September, the biggest number in the past year, noted Bernick.

But many of those job openings don’t align with the unemployed workers’ skills, according to a recent report from the California Center for Jobs and the Economy. Retail and leisure jobs accounted for some 55% of the job losses in California during the early months of the pandemic. But those jobs make up only 30% of the openings nationally, according to the report.

Q. How much has what pundits call the “Great Resignation” contributed to the unemployment rate?

A. More than 400,000 people quit their jobs in California in September, the highest at any point in the last two decades, according to the Public Policy Institute of California. Many of those workers are in low-wage sectors, such as retail and hospitality.

People are rethinking what they expect out of their jobs, said Manuel Pastor, the director of the Equity Research Institute at the University of Southern California, at the Milken Institute event.

“After 20 months of this social disaster, people are asking: What is the meaning of work in my life?” Pastor said. “Great awakening is leading to a great rebellion, and it may lead to a great recalibration.”

Q. Recently President Joe Biden signed a $1.2 trillion infrastructure bill into law, and estimates were that could mean hundreds of thousands of jobs in California. How soon will we see those jobs?

A. Probably not for a while. In 2009, Washington also passed a massive infrastructure bill as a way of helping boost employment during the Great Recession of 2007-09. But, Bernick said, that experience helped show that “infrastructure takes months or years to generate significant jobs,” as projects slowly come on line.

Q. How soon could we see California’s labor market fully recover?

A. Mitra said the state is growing a bit faster than the rest of the nation when it comes to its economy. But the growth will slow down as the state gets closer to the pre-pandemic level, she said. “There’s just not much room to go.”

Some economists, such as those at the California Center for Jobs and the Economy, expect unemployment rates to stay elevated for much of 2022, especially if the supply chain continues to be an issue.

“Openings at this level indicate the state’s job numbers likely will continue to be positive in the coming months, but not necessarily at levels that would close the recovery gap with an increasing number of other states, especially the employment gap,” the center wrote in its report.